India PMI Services – May’24

The seasonally adjusted HSBC India Services Business Activity Index remained well above the neutral mark of 50.0 in May, indicating a sharp upturn in output. However, the headline figure fell from 60.8 in April to 60.2 in May, marking the lowest level since December of the previous year. The growth was primarily supported by rising sales, productivity gains, and strong demand, but was moderated by competitive pressures and price hikes. A reading above 50 is an indicator of Growth whereas below 50 is an indicator of contraction in the economy.

Substantial but Slowed New Orders Growth

New orders continued to rise substantially, albeit the slowest in the calendar year to date. The increase in new orders was underpinned by favourable economic and demand conditions, alongside successful advertising campaigns. Nevertheless, fierce competition and extreme heat across the country impeded growth.

Surge in Export Orders

New export orders saw substantial improvement in May, with growth reaching the fastest pace since the series began in September 2014. Survey participants reported strong demand growth from regions such as Asia, Africa, Europe, the Middle East, and the US.

Intensified Cost Pressures

May also saw intensified cost pressures. Panel members noted increases in outlays on materials and labour, with higher prices reported for meat, packaging, and vegetables. Additional labour costs were attributed to overtime payments and salary revisions in response to demand strength and productivity gains. Consequently, several firms increased their staffing levels.

Marked Employment Increase

Employment in the service sector rose markedly in May, reaching the highest level since August 2022. Companies reported hiring junior and mid-level workers to meet growing demand and capacity pressures. Outstanding business volumes rose quickly in nearly three and a half years, prompting firms to expand their workforce.

Boost in Business Confidence

Business confidence among service providers reached an eight-month high in May. Expectations of fruitful marketing efforts, improved customer engagement, strong demand, and buoyant economic conditions contributed to the overall positive sentiment.


While India's service sector experienced a cooling in growth in May, the record upturn in export orders and increased employment highlight the sector's resilience and potential for recovery. Despite the challenges posed by competitive pressures, price hikes, and adverse weather conditions, the underlying strength in demand and business confidence points to a positive outlook for the coming months.